Obama Administration Preparing GM for Bankruptcy Next Week

I'd rather that then Union Motors.

This is really sad. it has come to day where the US has become liberalist an socialist enough to take control of the capitalistic symbol of America: GM. As a conservative, I miss the Bush administration and even the Clinton administration.

... Even though Bush was an idiot who screwed the economy, Obama is 200 times worse.

jb68902 and autonut2, without the Obama administration's efforts, there probably would be no GM! GM ceasing to exist would be sadder than a (temporarily) government-controlled GM! Remember that GM voluntarily went to the government for money (and thus the inevitable government role)........Obama didn't forcibly seize GM!

If it's going to take a temporary government takeover to get GM solvent again and making great cars, I'm all for it! It's better than the "let it fail, it's capitalism" nonsense that conservatives are so nostalgic about!

If true, it will be a sad day when the once mighty general needs the protection of a bankruptcy court to reorganize and continue business.

While many will analyze the fall of GM, it seems the writing was on the wall in the 1980s when GM under Smith put short term profit ahead of maintaining market share and long term viability. The clear attitude was that so long as profit margins were high, it didn't matter if others gained market share from GM. Cars like the Chevy Celebrity, the Cadillac Cimarron, Pontiac T1000 and an over-reliance on parts sharing helped keep cars cheap to make and also helped to destroy GMs reputation.

The lesson is that once gone, market share is hard and expensive to get back in a competitive market.

P.S. for the political types it was Dwight D. Eisenhower's Secretary of Defense that said "what was good for the country was good for General Motors and vice versa" I guess that thinking is alive today. Blaming the 4 month old Obama administration for GM's errors and trying to keep some manufacturing in the U.S. seems misplaced. There will likely be plenty of legitimate significant errors from the Obama administration to complain about, this probably isn't one of them.

http://mises.org/story/3484

"While many will analyze the fall of GM, it seems the writing was on the wall in the 1980s when GM under Smith put short term profit ahead of maintaining market share and long term viability. The clear attitude was that so long as profit margins were high, it didn't matter if others gained market share from GM. Cars like the Chevy Celebrity, the Cadillac Cimarron, Pontiac T1000 and an over-reliance on parts sharing helped keep cars cheap to make and also helped to destroy GMs reputation.

The lesson is that once gone, market share is hard and expensive to get back in a competitive market."

Absolutely, I think that is when the long term damage really occurred. I remember reading an interview with Smith sometime in the middle to late '80s, and that was pretty much his philosophy when criticized on the loss of market share that accelerated under his reign. He didn't see it as a problem as long as the company was profiting well. To paraphrase, "You don't get paid on market share, you get paid on profits". He came from the financial side of GM and focused more on cost cutting than product, which restrained the "car guys" inside GM. There were still quite a few appealing products to come out of GM during that time, but the volume products which paid most of the bills were getting more and more diluted.

It was under Smith's reign that the formerly separate divisions of GM were morphed into marketing organizations or "brands", as we call them today. Before that, each division had more autonomy. They did share basic platforms, as that is the most expensive part of car design, but each had more variations and the freedom to make them their own with a unique style and image of what the division represented.

There were high hopes for his successor, Robert Stempel, an engineer who had risen through the GM structure. But so much damage had been done by that time that Stempel was barely given a chance, and was fired after just two years by an impatient board of directors who also had no long term focus. They replaced Stempel with another financial guy, Jack Smith. Later, Rick Wagoner, also from the financial side, at least had the wisdom to bring in people like Bob Lutz, who put the focus back on product. I think this was the right strategy, but GM was quickly running out of time by then, quicker than I realized.

cwc1 is correct. Roger Smith began the slow death of GM by de-emphasizing product/brand in favor of cost. When Buick became Oldmsobile became Cadillac became Chevrolet, GM was done. Its downfall was holding on to an outdated market segmetention model (too many divisions). Instead of focusing on Chevy, Cadillac and Buick/Olds 20 years ago when Honda and Toyota proved a basic brand plus an upscale brand were enough, GM held on to all its brands and even expanded, and that was a fundamental strategic error.

Sadly, I think the Pontiac G8 is a true winner. I hope the find a way to make a Chevy out of it. I'd buy it now.

I guess now they're gonna be making some nice Korean based economy cars. Good luck GM.

Man, this really sucks. Well lets just hope that maybe GM can rebuild somday and be the amazing automaker it used to be. Or maybe it is time for America to start fresh and put GM in the books. But the scary thing is is that we will never know what is coming.

The government needs to stop giving them money. Just let them FAIL. Even in bankruptcy, GM will still fail, stop throwing away money. They should have been making quality cars to begin with. Its too late to start now. After filing bankruptcy, they will still close plants and layoff thousands of workers...lmao. GM = Goodbye Michigan. Its so cold in the D!

I don't think their shrinking market share is/was their biggest problem. In a way I think it was inevitable with the tremendous amount of competition that has arisen in the past 20 years, there's just no way any one manufacturer could expect to keep the majority of the American car market.

The problem is, GM has been unable to adapt to the declining market share and maintain profitability, because their fixed costs (labor and manufacturing capacity) are SO high.

Whether you blame management or the UAW, these fixed costs have been an 800 lb gorilla on their back that has driven them to do a lot of things that were not in their best long-term interest (mainly, pumping out too much product with too little quality control that has driven down their brand reputations to practically nil).